Business Basics – What is a Business?

A business is defined as any entity or person organized for the purpose of earning profit. Businesses may be for-profit or non-for-profit organizations which conduct to meet a social cause or further a personal charitable purpose. In either case, business activities must be conducted on a day-to-day basis and results must be regularly monitored. Business may also be concerned with manufacturing, trading, processing, distributing, holding auctions, franchising, leasing, and marketing. Basically, any activity performed by any of these entities to earn revenue qualifies as a business.

The term “corporation” is most commonly associated with businesses. However, there are many types of privately owned businesses, partnerships, and organizations which are considered to be corporations. All these types of businesses have one thing in common; they are registered at the country level with the government office. This registration is necessary in order to provide the required licensing and permits to carry out their respective activities, which is required for all businesses. All corporations are limited in the power to bind their assets and in the authority to create double entry book keeping, corporate naming rights, limited liability, and advertising privileges.

Limited liability means that the owners of the corporation are individually liable for the debts of the corporation. All the powers that the owners can exercise are limited to the extent of the power delegated to them by the articles of incorporation. There are various types of corporations, each with differing degrees of liability and accountability. The most common forms of corporations are limited liability partnerships (LLPs), limited liability company (LLC), and corporation. Each of these has its own advantages and disadvantages and should be studied carefully prior to choosing the most suitable form of business entity for you. Please do not hesitate to contact us if you need help regarding the selection of the perfect business entity for you.